You Have Been Hired by the No Hassle Collection Agency

question 141

Multiple Choice

You have been hired by the No Hassle Collection Agency to provide economic advice. The owner of the agency tells you that No Hassle's only variable input is the number of collection agents. The hourly wage for collection agents is $30.00. The marginal revenue product curve for collection agents reaches its maximum at five workers with a marginal revenue product of $34.00. What advice would you give this firm?

• A) Hire five collection so as to maximize profits.
• B) Shut down immediately, as the firm is not able to cover all of its variable costs.
• C) Decrease the wage rate paid to collection agents so that their marginal revenue product will decrease.
• D) Hire collection agents until the marginal revenue product is equal to the wage-which will occur when more than five agents are employed.

Distinguish between assets, liabilities, and equity within the context of the accounting equation.

Identify the primary financial statements and their roles in financial analysis.

Assess the role of financial management in preventing business failure.

Understand the use of financial ratios and industry benchmarks for business analysis.

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Definitions:

F-test

A statistical test used to compare the variances of two populations to ascertain if they are equal or significantly different.

One-way ANOVA

A statistical test that assesses whether there are statistically significant differences between the means of three or more unrelated groups.

T-test

A statistical test used to compare the means of two groups or to compare a sample mean to a known value, assessing whether differences are statistically significant.

F-test

A statistical test used to determine if there are significant differences between the variances of two or more groups.